ADB gives grant for LGU governance

By Ted P. Torres
The Philippine Star 04/19/2006

The Asian Development Bank (ADB) extend a $1.8-million technical assistance (TA) grant "to strengthen governance and financial management in local government units (LGUs) in the Philippines.

The TA has a total cost of $2.5 million but the National Government will account for the balance as counterpart fund. This will come in the form of office space, staff support, and other items.

The Department of Interior and Local Government (DILG) is the executing agency for the project, which will be carried out over two years beginning June 2006.

The grant will focus on three key aspects of local governance: an improved legal framework for decentralization; transparency and effectiveness in managing expenses and budget procedures; and better mobilizing of resources to provide needed services to constituents.

It will likewise support studies to improve the Local Government Code and other related laws and regulations; activities to strengthen national agencies in their overseeing and support for LGUs; and training to boost their budgeting, expenditure management, borrowing and debt management, and taxation.

"While much progress has been made in terms of decentralizing government operations over the past 14 years in the Philippines, the ambitious vision of effective and autonomous local governance has only been partly realized," said Tariq H. Niazi, ADB public resource management specialist.

Effective governance at the local level is hampered by the weak framework for decentralization, as well as by constraints both at the local and national level, Niazi explained.

At the same time, LGUs have frequently been unable to locally raise sufficient financial resources for their needs, leading to heavy dependence on the national budget and not enough funds for essential infrastructure investment.

LGUs in three provinces will be selected for participation in the project based on their prospects for accessing credit markets and commitment to improved governance, among others.

"LGUs are the frontline of government social service provision, at which more than 20 percent of total government spending takes place," Niazi said. "By helping LGUs to operate more efficiently and effectively, the grant will contribute to improved local welfare without requiring additional government transfers."